Let us help you manage an inheritance.

Although you may be thinking of how to spend your inheritance, you may want to consider how to invest your inheritance instead. You may get more from the inheritance in the long run if you apply it to your retirement savings, invest your inheritance, or pay off debts. A financial advisor can help you make a financial plan that will make the most of your inheritance.

Regardless of your plans, you don't have to decide what to do with your inheritance right away. It may be a good idea to put the money in a money market account or an FDIC-­insured account (such as a savings account or CD) while you take some time to decide.

If you would like some help figuring out what to do with an inheritance, Schwab is here for you. With a wide variety of investment options and a highly qualified team of Financial Consultants nationwide, we can provide comprehensive investment help and personalized guidance in a way that's right for you.

Inheriting a retirement plan.

IRA and 401(k) inheritance rules differ depending on whether the beneficiary is a spouse or non­-spouse. While a surviving spouse may take their deceased spouse's IRA as their own IRA or as an "inherited" IRA, a non-­spouse beneficiary must take the IRA as an "inherited" IRA. Your required minimum distributions (RMDs) will also vary depending on whether the original account holder was over or under age 70½.

We recommend speaking to your tax and legal advisor before taking any steps that would lead to any financial or tax ramifications.

Inheriting under a will or revocable living trust.

When someone passes away, their executor must administer their estate. A significant part of administering the estate is paying the decedent's debts, expenses, and taxes. Generally, once all debts, expenses, and taxes have been paid, the executor will then distribute the remaining assets to beneficiaries according to the terms of the will or the revocable trust.

If assets pass under a will, the assets will generally go through probate. Probate is specific to state law and can differ from state to state. Probate is the legal process for retitling the decedent's assets and may require an accounting to the court, which is a detailed report of all money that came into the probate estate and all money that went out of the probate estate.

There may not be much you can do to avoid going through probate once a loved one has passed away, but it's important to understand the probate process and the estate administration process as you work with an attorney or tax advisor.

Understanding which assets pass through probate.

Assets that pass through probate are typically assets that are owned solely by the decedent in their individual name and without a beneficiary designation. These assets may include a deceased person's share of tenants in common property, deceased person’s ½ share of community property, and deceased person's separate property. In addition, naming your estate as a designated beneficiary may also cause assets to go through probate.

Generally, assets that avoid probate are assets owned as joint tenants with rights of survivorship, tenants by the entirety, and community property with rights of survivorship. Other assets that avoid probate are assets owned by a revocable trust at the death of the beneficiary and assets having a beneficiary designation. Examples include retirement accounts, life insurance proceeds, annuities, and transfer on death (TOD) or payable on death (POD) designations where the named beneficiary is an individual, a trust, or a charity.

Checklist for inheriting money.

A Schwab Financial Consultant* can help you:

Put the inheritance money in a safe, accessible account while you create a longer-­term investment plan.

Assess your current assets and liabilities to help you decide where your inheritance money should go first (i.e., debt reduction vs. new investments).

Let us help you manage an inheritance.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation, personalized investment advice, or specific tax or legal advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, estate planning attorney, or investment manager. Wealth Strategist consultations with a Schwab tax, trust, and estate specialist are only available to clients who have at least $1 million at Schwab or are enrolled in Schwab Private Client. The Schwab Wealth Strategies Group also offers the Single Topic Solution consultation, which is a one­-time, no-­fee financial planning consultation that helps clients address a single specific planning need; it may include conversations regarding tax, trust, or estate matters. This consultation may be arranged by appointment only through a Schwab Financial Consultant.